Summary of Risk Savvy

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Risk Savvy book summary
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9 Applicability

8 Innovation

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Recommendation

Gerd Gigerenzer, director of the Max Planck Institute in Germany, offers a brightly written guide to better decision making. He reports a widespread lack of “risk literacy,” and says that confusion over probabilities is pervasive among average people as well as among professionals in many fields, including medicine and investment management. He recommends using heuristics, or rules of thumb, to derive the best solutions for problems with unknown risks and he cautions that complicated solutions seldom fix complex problems. Gigerenzer also discusses why you can grant more credence than you might think to both trust and intuition. getAbstract recommends this intelligent overview to everyone who wants to make better decisions and cope with risk more skillfully – and especially to investors, students, entrepreneurs and cancer patients, who may take a keen interest in what Gigerenzer says about probabilities.

In this summary, you will learn

  • Why people misjudge risk and don’t quantify uncertainty;
  • Why heuristics, or rules of thumb, can lead to better decisions than complicated calculations can reveal, and;
  • What rules you can use to improve your risk assessment and decision making.
 

About the Author

Gerd Gigerenzer, the director of the Max Planck Institute for Human Development in Berlin, also wrote Gut Feelings.

 

Summary

Uncertainty and Heuristics
Probabilities and risk assessment confuse many decision makers. Consider weather reports. If the chance of rain tomorrow is 30%, is rain probable during 30% of the day (7.2 hours), or in 30% of the area the forecast covers, or on 30% of the days to which such...

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Comment on this summary

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    Tracy Dalrymple 2 years ago
    Awesome read!
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    Koni Gebistorf 2 years ago
    @Jeffrey Pobst: You were absolutely right about the Monty Hall Problem; we have corrected it in the summary. Thanks for the hint!
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    Carl Davies 3 years ago
    Great abstract
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    Tom Pfahler 3 years ago
    The idea of "risk literacy" surrounding percentages of disease or weather forecasts is a very useful paradigm shift.
  • Avatar
    Sanna Tuorila 3 years ago
    Good points which I would recommend to read from original : The Black Swan from Nassim Nicholas Taleb.
  • Avatar
    Aaron Green 3 years ago
    Yes great summary
  • Avatar
    Aaron Green 3 years ago
    Great read

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